Sen. Julie Slama

District 1

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My top priority while serving District 1 in the Legislature is achieving meaningful and sustainable property tax relief. This week, I’ll be dedicating my column to an issue at the core of the property tax debate: K-12 school funding.

60-80% of local property taxes (depending on your district) collected in Nebraska are spent on funding K-12 education. The two main sources of funding for K-12 districts are local property taxes and state aid. The majority of state aid is provided through “equalization aid”. TEEOSA is the formula which determines the amount of equalization state aid a school district will receive in a given year. The Tax Equity and Educational Opportunities Support Act (TEEOSA) was introduced on January 9, 1990 as LB 1059. The mission of this bill was to provide tax equity for both taxpayers and schools, and to provide equity of educational opportunity for students. The basic formula that LB 1059 created was: needs – resources = equalization aid.

Needs are the costs the school district to educate its students, resources are the revenue sources, and equalization aid is distributed by the state to help make up the difference between those two numbers. The basic concept of LB 1059 has not changed since 1990 but statutes governing state aid have been tweaked several times. The result of these “tweaks” is a formula with a few dozen variables that requires high-level math to decipher. Variables to determine need include a “Focus School Allowance” and “Community Achievement Allowance,” both of which solely benefitted Omaha-area schools in Sarpy and Douglas counties, and the “System Averaging Adjustment,” which was a variable thrown in to benefit the largest school districts in the state. There are very few members of the Legislature with a working knowledge of TEEOSA, for two reasons: term limits have led to a loss in institutional knowledge built up amongst senators, and the formula is incredibly complex. Members of the body have hesitated to overhaul TEEOSA in years past, which has led to the formula becoming dated and structured to benefit the largest school districts in Nebraska.

I am wholeheartedly in favor of ensuring that every child in the state of Nebraska has access to educational opportunities within our public school system. A strong K-12 system is critical to our state’s growth. Providing those opportunities requires revenue, which again, is a pretty non-controversial fact. However, it is unacceptable for me to see the 15 largest school districts in Nebraska receive the lion’s share of equalization aid from the state (around 70-75%, depending on the year), leaving the remaining 229 school districts to fight over the 25-30% which remains. When our rural school districts depend almost solely on local property tax revenues to keep their doors open and lights on, our kids miss out on opportunities and our property taxpayers shoulder a much heavier burden to support their K-12 education. In District 1, the majority of our school districts do not receive equalization aid from the state. District 1 school districts that do receive equalization aid may receive $1 million one year and nothing the next, creating a very unreliable funding source.

At the core of Nebraska’s property tax crisis and one of the biggest hurdles to rural development, is our state’s strategy to fund schools through a system that relies far too heavily on local property tax revenue. Meaningful and sustainable property tax relief will be tough to achieve without an effort to reform this system.